Do we compare the right benefits?

1. Do we compare the right benefits?

2. Coverage period of the benefit: // Sweden: From the 2nd day of illness and with no duration limit in theory (even though people who are not able to return to work eventually are transferred to disability pension after a while) // U.K.: From the 29th week of illness and with no duration limit. (Is there a disability pension as well?) // Finland: From the 10th day of illness and with a maximum duration of about 1 year // Norway: From the 1st day of illness and with a maximum duration of about 1 year

3. Comparability of data // People with duration over 1 year account for about 45 % of the sickness benefit days in Sweden (2004) // About 88 % of the recipients of Incapacity Benefit in the U.K. receive long-term higher rate (duration over 1 year) (2001-2002) • Norwegian and Finnish data are to some extent comparable with Swedish data, but to a very little extent with British data • Are Swedish and British data less responsive to changes in labour market conditions/business cycles, since the recipients have looser ties to the labour market?

4. Other related benefits in Norway: Benefits for long-term sickness (over 1 year), for people where the work capacity has been temporary reduced: // Medical rehabilitation benefit // Vocational rehabilitation benefit // Disability benefit Benefit for long-term sickness (over 1 year), for people where the work capacity has been permanently reduced: // Disability pension

5. Recipients of health related benefits in Norway

6. Testing Swedish and Finnish data in the Norwegian sickness benefit model

7. Swedish data // Access to monthly data from jan. 1993-dec. 2005 on the number of sickness benefit days, unemployment rate and labour participation rate // Aggregate data (no subgroups by age or sex) // As explanatory variables different lags of the unemployment rate, the labour participation rate have been tested, and also the first difference of these two variables // Problem: Too short time series? Only 13 years of observations

8. The model, Autoregressive linear regression Variable Description sbdt the number of sickness benefit days in month t ur unemployment rate pr labour participation rate mj a dummy variable for month j As expected β1 and β2 turn out to be negative and β3 positive, all of them on a 1% level of significance.

9. Out-of-sample tests In addition: The forecast error of the explanatory variables (cf. Johan) Deviations from actual outcome

10. Finnish data // Access to quarterly data from 1991-2004 on the number of sickness benefit days, unemployment rate and labour participation rate (only yearly data on the two labour market variables) // Aggregate data (no subgroups by age or sex) // As explanatory variables different lags of the unemployment rate, the labour participation rate have been tested, and also the first difference of these two variables // Problem: A bit too short time series (14 years). Should capture at least an entire business cycle (boom and recession)

11. The model, Autoregressive linear regression Variable Description sbdt the number of sickness benefit days in quarter t ur unemployment rate pr labour participation rate (not included in the model) qj a dummy variable for quarter j As expected β1 and β2 turn out to be negative, both of them on a 5% level of significance.

12. Not possible to make many out-of-sampletest due to short time series (hard to estimate effect of the unemployment rate) In addition: The forecasting error of the explanatory variables (cf. Johan) Deviations from actual outcome